Johnson & Johnson ($JNJ) is gearing up for the next round of bidding for its Ortho Clinical Diagnostics unit, and the process has produced two unexpected allies bidding to snatch it up: Danaher ($DHR) and Blackstone Group.
Reuters reports that the diagnostics giant and private equity firm joined forces for the interim round of bidding, which has a Nov. 11 deadline. Both parties were on opposite sides of a previous acquisition bidding war that Danaher won in 2011 when it snatched up Beckman Coulter ($BEC) and substantially boosted its diagnostics and life sciences presence in the process. (Blackstone had teamed unsuccessfully with TPG Capital, Reuters noted.)
Of course, Danaher and Blackstone aren't the only ones in the game. According to the story, other private equity bidders remain in the running, including Bain Capital, Carlyle Group and BC Partners.
But that's not all. Reuters reports that Ortho's potential price tag has changed. Initial reports suggested the division could sell for up to $5 billion, but that number is now hovering around the $4 billion mark, sources told the news service.
J&J first started dropping hints back in January that it wanted to unload its Ortho Clinical Diagnostics business. News leaked earlier this fall that the conglomerate had begun to approach potential buyers, driven by a bid to unload less profitable diagnostics businesses and unlock the potential for a division that hasn't grown fast enough to meet executives' expectations. The winners will gain a business unit that produces everything including blood screening equipment and laboratory blood tests that screen for heart attack damage, hepatitis C and HIV, among other conditions and infections.
Molecular diagnostics may be hotter and faster growing these days. But Ortho Clinical Diagnostics still has plenty of juice for whichever company ends up buying it, because the tests continue to show steady demand and use. In 2012, it booked $2.16 billion in sales for J&J, a relatively small part of the conglomerate's total, but still nothing to sneeze at.
As one of the world's largest diagnostics companies, Danaher knows this. Danaher has pursued a number of acquisitions that have spurred its tremendous growth in the sector, and Ortho would help it leapfrog even higher as a major player in the space.
- read the full Reuters story